Can You Sue If a Credit Report Mistake Ruined Your Credit?

Experts share their tips and advice daily on BadCredit.org, helping subprime consumers navigate the world of personal finance.

At this point, hopefully you know bad credit can make your life pretty miserable.

But what if you have bad credit through no fault of your own?

Mistakes can happen that damage credit.

Sometimes companies will accidentally send a paid bill to collections as unpaid, and occasionally the credit reporting companies make errors in reports.

Regardless of whether the issue originated with a mistake by a lender or by a credit reporting company, you need to start by addressing the issue with the credit reporting agency.

In a Credit.com story about credit report mistakes, they interviewed William Howard, founder and managing partner of the consumer protection division at law firm Morgan & Morgan.

Howard said to start the process, you need to send a letter to the credit reporting agencies asking for a full credit disclosure, which is different from your regular credit report in that it may have extra information.

Once you have received it, you have to dispute the error with the credit reporting agencies even if it’s the lender’s fault, Howard said. If you don’t follow this protocol, the Fair Credit Reporting Act doesn’t allow you to sue.

“If (a lender) puts a bankruptcy on your credit and it’s wrong, you can dispute it with (the lender) until the cows come home but you can’t sue them. You are required to dispute it with the credit reporting agencies,” Howard told Credit.com.

He said to send them a certified letter stating, “Attached is my credit report and you are reporting this mistake.”

“It may be worth a try if

you’ve exhausted all other options.”

You must give them time to respond.

The FCRA gives the credit agencies 30 to 45 days once they receive notice from you.

If they do not respond or fail to resolve the issue, the Federal Trade Commission says you must contact The Consumer Financial Protection Bureau online at www.consumerfinance.gov or toll free at 855-411-2372.

If the company or credit reporting company at fault will not correct the problem, and the CFPB isn’t helpful, you can sue.

According to a Fox Business article published just more than a year ago, “While holding others accountable for inaccurate and costly credit hits is a relatively recent legal phenomenon, courts are beginning to recognize that a good credit standing is a valuable asset, and someone who devalues that asset should be made to pay.”

Essentially, the odds may not be in your favor, but it may be worth a try if you have exhausted all other options and truly believe your life has been negatively impacted by this mistake.

While only an attorney can help you truly evaluate your options, according to Fox Business, you are more likely to succeed in a lawsuit if you can answer yes to these questions:

Did a person or company do something wrong that damaged your credit?

Did this loss of credit harm you?

Did I alert them to the problem and try to get it fixed?

Did I have good credit before this happened?

If you have had no luck getting your problem corrected and can answer yes to these questions, it may be time to seek out a lawyer specializing in consumer issues.

Howard said your lawyer should not ask for an upfront fee, as they will recover their fees from the other party.

If you win your case, what can you expect to receive? Under the FCRA, you can sue for statutory damages of $100 to $1,000 per violation, plus punitive, actual and emotional damages.

This article was contributed by one or more members of the BadCredit.org editorial staff. To connect with our writers, editors, and other personal finance experts, please visit our Twitter, Google+ or Contact Us page.

Editorial Note: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. Every reasonable effort has been made to maintain accurate information, however all credit card information is presented without warranty. After you click on an offer you will be directed to the credit card issuer’s web site where you can review the terms and conditions for your offer.

Advertiser Disclosure: BadCredit.org is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free, we receive compensation from many of the offers listed on the site. Along with key review factors, this compensation may impact how and where products appear across the site (including, for example, the order in which they appear). BadCredit.org does not include the entire universe of available offers. Editorial opinions expressed on the site are strictly our own and are not provided, endorsed, or approved by advertisers.